Chelsey Tucker graduated with a Bachelor of History degree from Metropolitan State University in 2019. She now writes about insurance with her specialty being life insurance and has been quoted on Help Smart Phone and MEL Magazine.

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Dan Walker graduated with a BS in Administrative Management in 2005 and has been working in his family’s insurance agency, FCI Agency, for 15 years. He is licensed as an agent to write property and casualty insurance, including home, auto, umbrella, and dwelling fire insurance. He’s also been featured on sites like Reviews.com.

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Reviewed by Daniel Walker
Licensed Auto Insurance Agent

UPDATED: Mar 19, 2020

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The lowdown...

  • Aftermarket parts are defined as parts you add to your vehicle after purchasing it to improve its performance
  • No regulations exist for insurance companies covering your car’s aftermarket parts
  • You can buy certain specialized insurance policies to cover your aftermarket parts
  • You should keep receipts for all aftermarket purchases in case you need to make an insurance claim
  • You can get the best deal on auto insurance by comparing three to four policies and by reviewing your coverage every six months

Aftermarket parts, or performance parts, are accessories that you add to a vehicle after its purchase. Common aftermarket parts include sport wheels, rims, “spinners,” cold air intakes, and turbochargers.

Many of these parts are designed to increase your vehicle’s performance. Others exist solely for looks. Regardless of whether your aftermarket parts are for performance or looks, your insurance company classifies them as performance parts.

Insuring aftermarket parts can be tricky. Most states have no regulations governing how insurance companies cover these parts. In a claim situation, insurance companies are free to value aftermarket parts as they see fit.

Because insurance companies are businesses trying to make money, their goal is to maximize revenue and minimize expenses. They have a vested interest in paying out as little as they get away with.

The following sections can help you make sense of the confusing process of insuring your aftermarket parts. Understand that your insurance company has its own system for valuing these parts.

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Often, this system isn’t clearly defined. Speaking with your agent can help you get on the same page.

What are aftermarket parts?

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Aftermarket parts are also known as performance parts but they don’t necessarily improve your car’s performance. For instance, shiny rims that keep spinning even when your car stops are defined as performance parts even though they don’t change the way your car drives.

For the most part, an aftermarket part is:

  1. Any accessory that doesn’t come from the factory
  2. Any accessory you add to your car after you purchase it

Unlike parts that come from the factory, aftermarket parts don’t appear in insurance adjusters’ valuation guides. This can lead to them being undervalued in a claim situation.

Consequently, you want to make sure you’re on the same page with your insurance company and agent when you take out your policy.

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Insuring Aftermarket Parts

The insurance company has a lot of latitude for how they cover aftermarket parts. State regulations governing insurance coverage for performance parts are minimal.

The government requires that insurance companies pay claims in one of two ways: using the vehicle’s replacement cost or using the vehicle’s cash value.

Replacement Cost

The replacement cost method pays out the amount it would take to restore the car to its pre-accident condition. This cost can be difficult to estimate, particularly if your car has been heavily modified.

A good chance exists that there will be a discrepancy between what you claim your aftermarket parts are worth and what the insurance adjuster claims they’re worth.

This discrepancy is why you always want to keep your receipts when you buy performance parts for your car.

Cash Value

The cash value method pays out the vehicle’s market value at the time of the accident. You’ve probably heard of the various “blue books” that value cars. The insurance adjuster uses one of these books to determine your car’s market value.

Blue books don’t take aftermarket parts into consideration. So if your car is modified and your insurance company uses the cash value method, this method isn’t likely to work out in your favor.

Covering Your Aftermarket Parts

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Standard insurance coverage is likely to undervalue your aftermarket parts in a claim situation so you’ll probably want to take extra steps to make sure these parts are insured at the level you need.

The two most common ways to cover your aftermarket parts are by purchasing custom parts and equipment (CPE) coverage or buying an agreed value or stated value policy.

Custom Parts and Equipment (CPE) Coverage

CPE coverage exists solely for aftermarket parts. To be eligible to buy this insurance, you must carry both comprehensive and collision coverage on your vehicle. CPE coverage is usually subject to the same deductibles as your comprehensive and collision policy.

Before buying a CPE policy, it’s important to understand exactly what it covers. They’re not all the same. There’s no guarantee that a CPE policy covers your specific aftermarket products but here are some common items these policies cover:

  • Customized wheels and rims
  • Special tires, such as racing tires or oversize tires
  • Stereo and TV equipment
  • Custom paint jobs
  • Aftermarket seats
  • Running boards, fog lights, bed liners, trailer hitches, and so forth

This list isn’t exhaustive. If you have an aftermarket item that isn’t listed, you can probably shop around and find a CPE policy that covers it.

These policies vary in price based on the scope and amount of coverage. If you have expensive aftermarket parts and want to ensure them at full value, your premiums will undoubtedly be expensive.

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Agreed Value/Stated Value Policy

Another option is to purchase an agreed value or a stated value policy. These policies represent up-front agreements with your insurance company to cover your vehicle at a certain value that may differ from its blue-book value or replacement cost.

With an agreed value policy, it works just like it sounds: you and your insurance company agree up front on the amount they’ll pay you if your vehicle is totaled or stolen.

Let’s pretend you purchase a Honda Civic for $20,000. You install turbochargers, NOS tanks, racing stripes, custom exhaust, and so forth. The modifications set you back an additional $30,000 on top of what you paid for the car.

With an agreed value policy, you pay much more in premiums than you would pay to cover a $20,000 Civic but the insurance company agrees to insure your Civic at $50,000.

A stated value policy lets you state the amount of insurance you want on your car. It differs from an agreed value policy in that it doesn’t necessarily cover your car at its full value.

Suppose you purchase a classic car from Jay Leno for one million dollars but when you price out insurance at that level, you find it exorbitantly high.

Realizing you won’t be driving the car much and that you have it safely secured in your garage, you feel comfortable insuring it at a lower value. So you state your coverage level at $250,000, and your premiums are based on that amount.

Getting the Most for Your Aftermarket Parts

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Unless you go with an agreed or stated value policy, the value of your aftermarket parts is steeped in subjectivity. Chances are, when you file a claim, your insurance company will argue they’re worth less than what you say they’re worth.

It’s vital to keep all receipts when you buy performance parts for your car.

Suppose your insurance company uses the replacement cost method to pay claims. They have an esoteric formula to determine what it would cost to replace your vehicle.

Rest assured, the formula almost never works out in your favor. If you have receipts that show exactly what you’ve put into the car, you immediately have a stronger argument that your claim is worth more.

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Finding the Best Auto Insurance for Your Needs

You can find the best auto insurance deal by comparing several policies and reviewing your coverage every six months. You have many options available, so it’s wise to explore some of them before making your choice.

A good rule of thumb is to compare at least three to four car insurance policies before choosing one.

The first quote you receive isn’t always the best one, even if it sounds competitive but it provides a good frame of reference with which to compare additional quotes.

Once you’ve seen three or four policies and compared them side by side, you’ll have a better idea of what’s a good deal and what isn’t.

You’ll want to review your coverage thoroughly every six months when your policy is up for renewal. Your insurance needs change over time. Moreover, the insurance landscape itself changes. The policy that was the best deal six months ago might not be going forward.

Aftermarket parts can make your car more attractive and more fun to drive but they can be tricky to insure. Make sure you understand how insurance works on performance parts. Get on the same page with your insurance agent regarding what is and isn’t covered.

Use our free rate comparison tool below to find the insurance company that’s right for you!